Oil plunges $10 as U.S. bailout plan voted down

Light, sweet crude for November delivery sank $10.52, or 10.1 percent, to settle at $96.36 on the New York Mercantile Exchange, after earlier dropping as low as $95.04. It was crude's lowest trading level since prices edged back below $100 earlier this month; crude previously had not traded that low since February.Crude has fallen almost $25, or 20 percent, in the past week amid intense talks to hammer out a deal for the $700 billion bailout.Monday's nosedive came as House lawmakers defeated the emergency measure, which would have absorbed billions of dollars in banks bad mortgage-related debt and other risky assets in a bid to steady the teetering economy. Legislators and White House officials were scrambling to figure out the next step, but oil markets traders viewed the defeat as another bearish weight on oil."This is an acknowledgment that the global slowdown is here and energy demand is not going to be what it was," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.Oil market traders were skeptical before the plan was voted down. Many doubted it would go far enough to unfreeze credit markets and restore calm to the financial system. If the economy worsens, analysts say businesses could be forced to lay off workers, leading Americans to cut back on driving and other energy use in the world's largest consumer."With demand falling at the pace it is, nothing can support crude at levels above $100," said James Cordier, president of Tampa, Florida-based trading firms Liberty Trading Group and OptionSellers.com. "There's no underlying demand from any pocket of the U.S."In another sign of declining U.S. demand for fuel, pump prices kept falling Monday. A gallon of regular slipped about a penny overnight to a new national average of $3.643, according to auto club AAA, the Oil Price Information Service and Wright Express. They peaked at $4.114 a gallon on July 17.Prices could come down as U.S. Gulf Coast energy output ramps up following the passage of Hurricanes Ike and Gustav. About 57 percent of crude oil production and 53 percent of natural gas output remained shut-in after shutdowns prompted by the storms, according to the U.S. Minerals Management ServiceThe rescue plan would have given the administration broad power to use hundreds of billions of taxpayer dollars to purchase devalued mortgage-related assets held by cash-starved financial firms.Congress insisted on a stronger hand in controlling the money than the White House had wanted. The government would have taken over huge amounts of devalued assets from beleaguered financial companies in hopes of unlocking frozen credit.Oil prices were also pushed down by a stronger dollar. Investors often buy crude futures as a hedge against a weakening dollar and inflation, and sell when the dollar strengthens.The 15-nation euro fell Monday to $1.4469 from $1.4614 on Friday.In other Nymex trading, heating oil futures fell 22.89 cents to settle at $2.7885 a gallon, while gasoline futures dropped 26.81 to settle at $2.397 a gallon. Natural gas futures lost 40.7 cents to settle at $7.221 per 1,000 cubic feet.In London, November Brent crude fell $9.56 to settle at $93.98 a barrel on the ICE Futures exchange.